To read the full report, please download the PDF above.
Middle East Daily
SOOJIN KIM
Research Analyst
DIFC Branch – Dubai
T: +44(4)387 5031
E: soojin.kim@ae.mufg.jp
MUFG Bank, Ltd. and MUFG Securities plc
A member of MUFG, a global financial group
Middle East Daily
COMMODITIES / ENERGY
Oil rebounds on risk-on sentiment despite persistent oversupply concerns. Oil prices rebounded from their lowest close in nearly two months, supported by a broader rally in global financial markets following the Fed’s rate cut and a strong equity market backdrop. Brent climbed toward USD62/b and WTI hovered near USD58/b, recovering from earlier losses, as optimism in risk assets helped offset a generally bearish outlook for crude. The rebound came despite continued warnings from the International Energy Agency of a record oil surplus and global inventories at a four-year high, factors that have contributed to oil losing nearly 20% this year. Geopolitical developments offered additional support, with the US announcing new sanctions related to Venezuela and seizing an oil tanker, raising near-term supply risks. Meanwhile, rising production from major non-OPEC suppliers, including Brazil, the US, Canada, Guyana, and Argentina, continues to reinforce concerns about ample global supply.
Gold holds firm as Fed easing outlook supports precious metals. Gold prices steadied near USD4,280/oz after three days of gains, supported by expectations of further US monetary easing following this week’s rate cut. Although the Fed signalled only one additional rate cut next year, market pricing points to two reductions in 2026, reinforcing a favourable low-rate environment for non-yielding assets. Sentiment was further supported by the Fed’s plan to begin USD40bn in monthly Treasury bill purchases, boosting system liquidity. Gold is up more than 60% this year and silver has more than doubled, marking their strongest annual performances since 1979, driven by sustained central-bank buying, rising ETF inflows, and investor shifts away from sovereign bonds and currencies. Silver has also benefited from strong physical demand and market tightness, pushing prices to a recent record above USD64/oz.
MIDDLE EAST - CREDIT TRADING
End of day comment – 11 December 2025. Weak markets overall but with some differentiation. Post FED and UST rally cash didn't moved much at all in the morning, in fact the market saw sellers first mostly in bonds the market had been trying to sell in the days before, namely some AT1 and newer issues. On the other side though during the day IG long end bonds caught a bid and this sector is outperforming today. ADGB 54s closes +0.50pt/-2bp. Away from IG long bonds though nothing closes tighter and with UST gyrations and sticky cash prices spreads are +3bp in the 5y/10y bucket. What is still heavy are newer issues like OMANGS 33s, SHARSK 36s, BOSUH 30s, SIB 30s, DUBAEE 30s where the market and accounts just want to cut out of risk ahead of year end without much success though. Flow-wise it was a quieter day overall, ETFs were 2way and saw some dedicated EM accounts adding bonds, so buyers and sellers were netting each other out. It becomes though more a question what bonds buyers are buying and what bonds sellers are selling. Into year-end it feels that technicals will rule price action and there is a bit a risk that some bonds in more illiquid corners might have outsized moves before finding a clearing level.
MIDDLE EAST - MACRO / MARKETS
Turkey Central Bank delivers larger than expected rate cut. Turkey’s central bank (CBRT) surprised markets by cutting its policy rate by 150bps to 38%, following more favourable headline inflation data that showed easing price pressures and a slightly declining underlying inflation trend in recent months. Policymakers noted that demand conditions continue to support disinflation, even as recent GDP growth exceeded forecasts, while cautioning that inflation expectations and pricing behaviour still pose risks. Forward guidance remained unchanged, with decisions to be taken on a meeting by meeting bases and scope to tighten policy if inflation deviates from targets. We expects the CBRT will continue cutting rates through most of 2026, slowing later in the year, bringing the policy rate to around 27.5% by end-2026. Risks to this path are balanced, with larger than expected minimum wage hikes potentially slowing disinflation, while weaker food and energy prices could allow for faster easing.
UAE-EU launch strategic partnership negotiations. The UAE has formally launched negotiations with the EU on a Strategic Partnership Agreement, marking a significant step toward deepening bilateral relations. The proposed pact will establish a structural framework for cooperation in key forward-looking areas such as digitisation, artificial intelligence, renewable energy, research and innovation, alongside broader economic and humanitarian collaboration. UAE Minister of State, Lana Nusseibeh, highlighted that intensive negotiations on a FTA are progressing rapidly, supported by strong shared economic interests, with the EU already the UAE’s top investment partner and second-largest trading partner. Both sides emphasised that the agreement aims to translate long-standing cooperation into tangible outcomes by strengthening trade ties, expanding investment opportunities, deepening business to business engagement, and reinforcing the UAE’s role as a strategic hub liking Europe with the Middle East and Asia, while also contributing to global stability and multilateral cooperation.
